The effects of the particle size of a Fe/Cu/K catalyst on CO and CO2 hydrogenation reactions as well as the variation of crucial factors such as surface area and basicity, reduction, carburization, and catalytic behavior of precipitated Fe/Cu/K catalysts were evaluated. Hematite nanoparticle catalysts with various surface tensions were produced by homogeneous precipitation in alcohol/water solvents. The basicity of the K-promoted iron catalyst was higher in iron catalysts with lower particle size. The increase in K-basic sites at the surface of catalysts with smaller particle size was attributed to their higher surface areas. Elevation of catalyst basicity led to considerably stronger dissociative CO adsorption. Shifting the oxygen removal pattern to lower temperature was the consequence of faster nucleation of FeCx crystallites on promoted surface oxides. CO2 hydrogenation can occur in two distinct direct and indirect routes via the Fischer-Tropsch mechanism.